Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Preference Shares) (No. 2) Regulations 2006
- Act Code: SFA2001-S160-2006
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA) (specifically, section 337(1))
- Legislative Citation: SL 160/2006
- Commencement: 13 March 2006
- Status: Current version as at 27 March 2026 (per the provided extract)
- Key Provisions: Section 1 (Citation and commencement); Section 2 (Definitions); Section 3 (Exemption)
- Regulatory Authority: Monetary Authority of Singapore (MAS)
- Enacting Date: Made on 6 March 2006 by HENG SWEE KEAT, Managing Director, MAS
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Preference Shares) (No. 2) Regulations 2006 is a targeted regulatory instrument. In plain terms, it creates a narrow exemption from certain market conduct rules in the Securities and Futures Act (the “Act”) for a specific kind of trading activity—namely, “stabilising action”—conducted in relation to a particular issuance of preference shares.
Stabilising action is a common market practice around new issues. When securities are first issued, their prices can fluctuate sharply due to supply-demand imbalances and initial investor sentiment. Under regulated frameworks, stabilising activity may be permitted to help maintain orderly trading and reduce excessive volatility. However, stabilising activity can also resemble conduct that market conduct laws seek to prevent (for example, manipulative or misleading trading). This is why exemptions are typically tightly controlled and time-limited.
This Regulations’ scope is deliberately narrow: it applies to stabilising action taken in respect of “Preference Shares” defined in the Regulations—Non-Cumulative Perpetual Preferred Securities issued in March 2006 by Mizuho Capital Investment (EUR) 1 Limited, for a principal amount up to EUR 2,000,000,000. It also limits the stabilising participants to J.P. Morgan Securities Ltd. (and related corporations) and confines the exemption to a defined period after issuance.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal citation and sets the commencement date. The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Preference Shares) (No. 2) Regulations 2006” and come into operation on 13 March 2006. For practitioners, this matters when assessing whether stabilising activity occurred within the legal framework.
Section 2 (Definitions) is central because it determines the boundaries of the exemption. Three defined terms are particularly important:
- “Preference Shares” are precisely identified as the Non-Cumulative Perpetual Preferred Securities issued in March 2006 by Mizuho Capital Investment (EUR) 1 Limited (up to EUR 2,000,000,000). This means the exemption is not generic; it is tied to that specific instrument and issuance.
- “securities” takes its meaning from section 239(1) of the Act. This cross-reference ensures the exemption operates within the Act’s broader definitional framework.
- “stabilising action” is defined as an action taken in Singapore or elsewhere by J.P. Morgan Securities Ltd. (or any of its related corporations) to buy, or to offer or agree to buy, any of the Preference Shares to stabilise or maintain the market price of the Preference Shares in Singapore or elsewhere. The definition is both participant-specific (J.P. Morgan group) and purpose-specific (stabilisation/price maintenance).
Section 3 (Exemption) is the operative provision. It states that sections 197 and 198 of the Act shall not apply to stabilising action taken in respect of any of the Preference Shares within 30 days from the date of issue, provided the stabilising action is carried out with one of the specified categories of counterparties.
In practical terms, Section 3 removes the application of the Act’s market conduct provisions (sections 197 and 198) to qualifying stabilising activity. While the extract does not reproduce the text of sections 197 and 198, those provisions are typically the kinds of rules that restrict manipulative or improper trading practices. The exemption therefore functions as a legal “safe harbour” for stabilising conduct, but only if all conditions are met.
The exemption is conditioned on the counterparty category and transaction size/structure. It applies where stabilising action is taken with:
- (a) an institutional investor
- (b) a relevant person as defined in section 275(2) of the Act
- (c) a person who acquires the Preference Shares as principal, but only if the consideration is not less than $200,000 (or its equivalent in a foreign currency) for each transaction, whether paid in cash or by exchange of securities or other assets
Two practitioner takeaways follow from this structure. First, the exemption is not merely about the stabiliser’s conduct; it is also about who the stabilising trades are with. Second, for principal acquisitions, the exemption is subject to a minimum consideration threshold of $200,000 per transaction (or equivalent). This threshold is designed to exclude small retail-type transactions and to ensure the exemption is used in a manner consistent with institutional market practices.
Finally, the time limit—within 30 days from the date of issue—is a hard boundary. Even if the stabiliser and counterparties meet the definitions, stabilising action outside the 30-day window would not fall within the exemption and would therefore remain subject to sections 197 and 198 of the Act.
How Is This Legislation Structured?
The Regulations are structured in a straightforward, three-section format:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions that define the scope of “Preference Shares” and “stabilising action”, and incorporates the Act’s definition of “securities”.
- Section 3 contains the exemption, specifying which Act provisions are disapplied, the time window, and the permitted counterparty categories and transaction threshold.
There are no additional parts or complex schedules in the extract provided. This is typical of targeted exemptions: the legal instrument is designed to be read alongside the Act, with the exemption operating as a narrow carve-out.
Who Does This Legislation Apply To?
Although the Regulations are an exemption from provisions in the Act, they effectively apply to market participants involved in stabilising activity in relation to the defined Preference Shares. The stabilising activity must be taken by J.P. Morgan Securities Ltd. or its related corporations, as the definition of “stabilising action” is participant-specific.
However, the exemption also depends on the nature of the counterparties to the stabilising transactions. It applies when stabilising action is taken with an institutional investor, a relevant person (as defined in the Act), or a principal acquirer meeting the $200,000 minimum consideration threshold per transaction.
In other words, while the stabiliser is constrained by the definition, the exemption’s availability is also constrained by the counterparty and transaction economics. Practitioners advising trading desks, compliance teams, or legal counsel for issuers and underwriters should therefore assess both sides of the transaction.
Why Is This Legislation Important?
This Regulations is important because it provides legal certainty for stabilising activity in a specific issuance context. Without an exemption, stabilising trades could be scrutinised as potential breaches of market conduct rules—particularly where trading patterns might appear to influence price. By disapplying sections 197 and 198 of the Act for qualifying stabilising action, the Regulations reduces regulatory risk for permitted stabilisation strategies.
From a compliance perspective, the Regulations’ value lies in its precision. It does not create a broad stabilisation regime for all securities or all stabilisers. Instead, it is tied to: (i) a specific instrument (the defined Preference Shares), (ii) a specific stabiliser (J.P. Morgan group), (iii) a specific time window (30 days from issue), and (iv) specific counterparty categories and transaction thresholds. This precision helps compliance teams implement controls and document eligibility.
For practitioners, the key practical impact is that legal advice must be structured around the exemption’s conditions. If stabilising activity is contemplated, counsel should verify: the instrument matches the definition; the stabiliser is within the defined group; the trades occur within the 30-day period; and the counterparties and transaction values fall within the permitted categories. Where any element is uncertain—particularly the counterparty classification or the $200,000 threshold for principal acquisitions—an exemption analysis should be documented and, where appropriate, supplemented with additional compliance safeguards.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular, sections 197, 198, 239(1), 275(2), and the enabling provision 337(1).
- Futures Act (as referenced in the provided metadata context)
- Stabilising Act (as referenced in the provided metadata context)
- Timeline (legislation timeline reference as provided in the metadata)
Source Documents
This article provides an overview of the Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Preference Shares) (No. 2) Regulations 2006 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.